NCLT

The proposed merger between Byju’s and Aakash Educational Services Ltd (AESL) has hit a stumbling block as both companies withdrew their merger petition during a hearing at the National Company Law Tribunal (NCLT) on Tuesday. This move follows a series of governance disputes and challenges encountered since the acquisition. Initially structured as a cash-and-stock deal, Byju’s acquired AESL for $940 million, with the intention of integrating the brick-and-mortar test prep company into its digital education ecosystem. However, disagreements over governance issues and share-swap arrangements have led to a standstill in the merger process. The Chaudhry family, founders of AESL, along with private equity firm Blackstone, were slated to receive shares of Think & Learn, the parent company of Byju’s, as part of the acquisition deal. However, complications arose when the Chaudhry family refused to proceed with the share swap, citing governance concerns. Byju’s responded by issuing a legal notice to the founders of AESL, alleging resistance to complete the share swap. The Aakash saga took a new turn when Ranjan Pai, chairman of Manipal Education and Medical Group, emerged as the largest shareholder in Aakash Institute, holding a 39 percent stake. This shift occurred after the conversion of a $300 million investment made by Pai in 2023 into equity. Previously, Pai had invested $200 million to assist Byju’s in clearing its debts and interests to Davidson Kempner, further entangling the financial complexities surrounding the merger. Meanwhile, Byju’s is grappling with its own challenges, including a cash crunch and legal disputes. A group of investors has filed a case alleging ‘oppression and mismanagement’ against the company’s management. The NCLT’s directive to segregate proceeds from a rights issue underscores the legal complexities facing Byju’s, with investors seeking to halt the $200 million rights issue amid concerns over share dilution. The withdrawal of the merger petition underscores the complexities and challenges inherent in consolidating two prominent players in the edtech sector. Governance disputes, financial intricacies, and legal hurdles continue to shape the trajectory of Byju’s and Aakash Institute, highlighting the evolving landscape of India’s education technology industry.